Editor’s Note
This article captures the current fervor in the gold market, where soaring prices seem to be fueling, rather than dampening, consumer demand. It highlights a fascinating behavioral trend that defies conventional economic expectations.
Gold prices have once again surged past $5,000 per ounce. A 1,000-gram “gold brick” is selling out. Some customers walk into stores and say, “Don’t ask the price, just take it.” You might think high prices would deter buyers, but the reality is “the higher it goes, the more people buy.”
Gold prices have recently been on a “rollercoaster” ride, plummeting before sharply rebounding. On February 19th, it successfully “summited” $5,000 per ounce, bringing relief to many investors.
The prevailing market “script” is that the Federal Reserve is likely to begin cutting interest rates in June. This expectation is like a “shot in the arm” for the gold market. Coupled with the unpredictable plot of the international situation “drama”—U.S.-Iran negotiations and Russia-Ukraine peace talks are full of variables—many are turning their attention back to gold, the “old reliable safe-haven actor.” Consequently, after a significant drop, gold and silver prices have experienced a “technical rebound.”
Walking into the Caibai Hall, you might doubt if you’re in the wrong place. It doesn’t look like a store selling precious jewelry, but more like a holiday promotion at a vegetable market, except people are scrambling for gold, not cabbage.
Price tags show eye-catching numbers: pure gold at 1,528 yuan per gram, investment gold bars base price at 1,112 yuan per gram. Even so, it can’t dampen people’s enthusiasm.
While gold is charging ahead triumphantly, seasoned investors are already warning to watch the road ahead and beware of sharp turns.
Some analysis points out that as market expectations for a Fed rate cut in June have cooled somewhat, gold has encountered strong resistance at the key “level” of $5,000. Some savvy investors have already started to “take profits off the table,” which has brought considerable downward pressure on the gold price.
He also highlighted a potential risk: The next Federal Reserve Chairman, Kevin Warsh, has expressed a desire to “slim down” the Fed’s balance sheet. This is like “tightening the faucet” for the global market and could be a persistent “cooling” signal for gold prices.
